‘Emirates Business 27/7′, a product of the Dubai-based Arab Media Group, has this story. It reports on a study suggesting that Saudis fear the consequences of decreasing demand for oil and pressures to find alternative fuels. The way in which high oil prices affect the global economy is a concern as well, as Saudi Arabia is well integrated into that global economy. What hurts other countries ends up hurting Saudi Arabia.
Saudis see $100 oil as too high, says study
Nadim KawachSaudi Arabia may believe oil prices at $100 are too high as they could depress crude demand amid the current global financial crisis, a study said yesterday.
Despite a sharp decline in oil prices over the past few weeks, their climb to a record high of nearly $150 in July has already affected growth in demand and the latest financial crisis could push it down further, said the study by the London-based Centre for Global Energy Studies (CGES), which is run by former Saudi Arabia’s oil minister Sheikh Ahmed Zaki Al Yamani.
The centre’s monthly oil report, sent to Emirates Business, said the Kingdom appears not in a hurry to cut its crude output in line with a collective Opec agreement this month to reduce production by 520,000 barrels per day (bpd).
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September:25:2008 - 23:43
I think I understand why high oil prices – too high that is – are a concern to the Saudis. As the price climbs, alternative fuels and energy sources become more economically viable. Also, it becomes feasible to drill, pump, and ship oil from more remote and inhospitable areas. As these additional sources come online, Saudi influence in the world decreases. It is one thing if you can turn on/off the majority of someone’s energy supply. However, it is not nearly as big a stick when you control only a small fraction of that supply…
September:26:2008 - 02:24
I’m not sure the ‘turning on/off of oil supplies’ is actually a Saudi motive. They tried that once, in 1973, and got bitten pretty badly. They’ve since said that they would not use oil as a ‘weapon’.
I think they do want to maintain their role as the ‘swing’ producer, able to influence oil prices globally. Their record has been to keep prices stable and lower than the hawks in OPEC would prefer. When the global economy goes belly-up, so does the Saudi economy.
They also don’t want to see an oil-free world before they’ve developed their economy away from being so dependent on oil.
These are not irrational plans.